Media Mythbusters Blog

From the Republican National Committee:

McCain Pushed For Fannie And Freddie Reform, Which Former President Clinton Acknowledges Was Blocked By Democrats:

McCAIN PUSHED FOR FANNIE AND FREDDIE REFORM

John McCain Was Pushing For Reform Of Fannie Mae And Freddie Mac While “Obama Was Notably Silent”:

“In 2006, [McCain] Called For Tighter Regulation Of Fannie Mae And Freddie Mac, The Two Federally Chartered, Privately Run Mortgage Giants That The Government Now Has Taken Over.” (Steve Thomma, “Out Of Bounds! Obama Misstates McCain’s Position On Regulation,” McClatchy Newspapers, 9/20/08)

The Washington Post: McCain Pushed For Fannie And Freddie Regulation While “Obama Was Notably Silent.” “In 2006, he pushed for stronger regulation of Fannie Mae and Freddie Mac — while Mr. Obama was notably silent. ‘If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole,’ Mr. McCain warned at the time.” (Editorial, “‘Always For Less Regulation‘?” The Washington Post, 9/19/08)

NOTE: In Just Four Years, Barack Obama Has Received More Money From Fannie Mae And Freddie Mac Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Senate Banking Committee Chairman Sen. Chris Dodd. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org, 9/11/08)

EVEN BILL CLINTON ACKNOWLEDGES DEMOCRATS BLOCKED FANNIE AND FREDDIE REFORM

Former President Bill Clinton Acknowledges Democrats Resisted Fannie Mae And Freddie Mac Reform:

Former President Clinton: “I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac.” (ABC’s “Good Morning America,” 9/25/08)

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For Years, Obama Supporters In Congressional Oversight Committees Blocked Efforts To Reform Fannie Mae And Freddie Mac:

“The Powerhouse Democratic Overseers Of The Banking Committees — Rep. Barney Frank, Sen. Christopher Dodd And Sen. Chuck Schumer — Protected Fannie And Freddie.” (Robert Novak, Op-Ed, “Crony Image Dogs Paulson’s Rescue Effort,” Chicago Sun-Times, 7/17/08)

Obama Ally Rep. Barney Frank (D-MA) Blocked Multiple Attempts At Reforming Fannie Mae And Freddie Mac Spanning Back To 1992:

Frank Has Fought GSE Reform Since 1992. “[Frank’s] record is close to perfect as a stalwart opponent of reforming the two companies, going back more than a decade. The first concerted push to rein in Fan and Fred in congress came as far back as 1992, and Mr. Frank was right there, standing athwart. But things really picked up this decade, and Barney was there at every turn.” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

In 2000, Frank Opposed Rep. Richard Baker’s GSE Reform Legislation. “In 2000, then-Rep. Richard Baker proposed a bill to reform Fannie and Freddie’s oversight. Mr. Frank dismissed the idea, saying concerns about the two were ‘overblown’ and that there was ‘no federal liability there whatsoever.’” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

In 2002, Frank Said The GSEs Were Not “Problems.” “Two years later [in 2002], Mr. Frank was at it again. ‘I do not regard Fannie Mae and Freddie Mac as problems,’ he said in response to another reform push. And then: ‘I regard them as great assets.’” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

In 2003, Frank Reassured The Public About Fannie And Freddie. “Again in June 2003, the favorite of the beltway press corps [Rep. Frank] assured the public that ‘there is no federal guarantee’ of Fan and Fred obligations.” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

“A Month Later, Freddie Mac’s Multibillion-Dollar Accounting Scandal Broke Into The Open. But Mr. Frank Was Sanguine. ‘I Do Not Think We Are Facing Any Kind Of A Crisis,’ He Said At The Time.” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

“Three Months Later He Repeated The Claim That Fannie And Freddie Posed No ‘Threat To The Treasury.’ Even Suggesting That Heresy, He Added, Could Become ‘A Self-Fulfilling Prophecy.’” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

“In April 2004, Fannie Announced A Multibillion-Dollar Financial ‘Misstatement’ Of Its Own. Mr. Frank Was Back For The Defense. Fannie And Freddie Posed No Risk To Taxpayers, He Said, Adding That ‘I Think Wall Street Will Get Over It’ If The Two Collapsed.” (Editorial, “Fannie Mae’s Patron Saint,” The Wall Street Journal, 9/10/08)

Obama Ally Sen. Chris Dodd (D-CT) Led Efforts To Block Reform Of Fannie Mae And Freddie Mac:

Dodd Actively Opposed GSE Reform Measures And Weakened Existing Regulations. “During this period, Sen. Richard Shelby led a small group of legislators favoring reform, including fellow Republican Sens. John Sununu, Chuck Hagel and Elizabeth Dole. Meanwhile, Dodd — who along with Democratic Sens. John Kerry, Barack Obama and Hillary Clinton were the top four recipients of Fannie and Freddie campaign contributions from 1988 to 2008 — actively opposed such measures and further weakened existing regulation.” (Al Hubbard and Noam Neusner, Op-Ed, “Where Was Sen. Dodd?” The Washington Post, 9/12/08)

Dodd Called The President’s Suggestions For Regulations “Inane” And Recommended The President “Immediately Reconsider His Ill-Advised” Proposals. “As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to ‘immediately reconsider his ill-advised’ reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president’s suggestion for a strong, independent regulator of Fannie and Freddie was ‘inane.’” (Al Hubbard and Noam Neusner, Op-Ed, “Where Was Sen. Dodd?” The Washington Post, 9/12/08)

Dodd Called On The Regulator For Fannie Mae And Freddie Mac To Lift Portfolio Caps. “Both Schumer and Christopher J. Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee, have called on Fannie Mae and Freddie Mac’s regulator to lift the portfolio caps. They argue that allowing the two firms to buy more mortgages, at least temporarily, would inject much needed liquidity into the market and calm the financial markets.” (Michael R. Crittenden, “Schumer Will Seek To Lift Cap On Mortgage Portfolios Of Fannie Mae, Freddie Mac,” Congressional Quarterly Today, 8/16/07)

NOTE: Since 1989, Dodd Has Received At Least $165,400 From Fannie Mae And Freddie Mac: $48,500 From PACs And $116,900 From Individuals, Receiving More Than Any Other Politician. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org, 9/11/08)

Obama Ally Sen. Chuck Schumer (D-NY) Has Been A “Leading Voice For [Financial] Deregulation,” And Led Efforts To Block Reform Of Fannie And Freddie:

Until The Current Financial Crisis, Sen. Schumer “Had Been A Leading Voice For Deregulation,” And Opposed Reducing Taxpayer Risks Associated With Fannie Mae And Freddie Mac. “Until the current credit crisis, Mr. Schumer had been a leading voice for deregulation: He has championed the repeal of a Great Depression-era law that prohibited commercial banks from underwriting securities; he has written an opinion piece calling for the Sarbanes-Oxley Act to be ‘re-examined,’ and he has opposed a bill that sought to reduce taxpayer risk in the event of a housing market slowdown by requiring Freddie Mac and Fannie Mae to sell their entire investment portfolios of about $1.5 trillion worth of mortgage assets.” (Joseph Goldstein, “Pro-Deregula tion Schumer Scores Bush For Lack of Regulation,” The New York Sun, 9/22/08)

Despite Reports Of Fraudulent Accounting, Schumer Opposed Creating A Strong Regulator For Fannie Mae And Freddie Mac In 2004. “Even after Freddie Mac was shown to have manipulated earnings, Congress remained deadlocked over legislation to create a stronger regulator. Opposing one such bill in 2004, Sen. Charles E. Schumer (D-N.Y.) argued that a hostile regulator could use the proposed powers to choke the companies.” (David S. Hilzenrath, “Fannie, Freddie Deflected Risk Warnings,” The Washington Post, 7/14/08)

In 2005, Sen. Schumer Said “Fannie And Freddie Over The Years Have Done A[n] Incredibly Good Job” And “Have Filled In Gaps That The Market Wouldn’t Touch.” Schumer: “I’d like to make a couple of points here. First, I think Fannie and Freddie over the years have done a [sic] incredibly good job and are an intrinsic part of making America the best-housed people in the world. I think they have filled in gaps that the market wouldn’t touch. I think they have made the secondary market flow smoothly and well. And overall, I think, if you look over the last 20 or whatever years, they’ve done a very, very good job.” (Sen. Chuck Schumer, Subcommittee On Banking, U.S. Senate, He aring, 4/6/05)

Schumer: “The bottom line is very simple: We have a great housing market here. Fannie and Freddie are intrinsically wrapped up in that market, and you’ve got to be careful before you do too much dramatic change.” (Sen. Chuck Schumer, Subcommittee On Banking, U.S. Senate, Hearing, 4/6/05)

In 2005, Schumer Said He Didn’t See “Eye To Eye” With Fed Chairman Alan Greenspan About The Need For GSE Reform. Chairman Greenspan: “I think the most important thing to take away is that it’s important to make the regulator a vehicle of safety and soundness for the GSEs, Fannie and Freddie especially. But unless there is some procedure that effectively contains the size of the GSE portfolios, we are leaving at risk a very significant segment of our financial markets.” … Sen. Schumer: “Mr. Chairman. As you know, I have utmost respect for you and think you’ve done an excellent job as Fed chairman, but on this issue we don’t see eye to eye. And in fact I’d say some of the things you’re saying — you’re a lot smarter on these issues than we are, but they almost defy common sense.” (Housing And Urban Affairs, Banking Subcommittee, U.S. Senate, Hearing, 4/6/05)

Schumer Called On The Regulator For Fannie Mae And Freddie Mac To Lift Portfolio Caps To Buy More Mortgages. “Both Schumer and Christopher J. Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee, have called on Fannie Mae and Freddie Mac’s regulator to lift the portfolio caps. They argue that allowing the two firms to buy more mortgages, at least temporarily, would inject much needed liquidity into the market and calm the financial markets.” (Michael R. Crittenden, “Schumer Will Seek To Lift Cap On Mortgage Portfolios Of Fannie Mae, Freddie Mac,” Congressional Quarterly Today, 8/16/07)

After The Subprime Housing Crisis Began, Schumer Advocated Raising The Cap On What Fannie Mae And Freddie Mac Could Lend. “Even last September, as the subprime housing crisis began to metastasize and the market was expressing concerns about the pair, Sen. Charles Schumer (D-N.Y.), the powerful chair of the Senate banking subcommittee on housing, had the very bad (and ultimately rejected) idea of raising the cap on what Fannie and Freddie could lend by 10 percent. Since then the companies have reported losses of $11 billion, and there’s uncertainty about just how much more damage there will be from future defaults.” (Editorial, “We Can’t Say No, But We Can Regulate Them,” [New York] Newsday, 7/20/08)

Other Democrats Backing Obama Also Resisted Regulatory Reform Of Fannie And Freddie:

Sen. Jack Reed (D-RI): “[Chairman Greenspan] does argue that GSEs present greater systemic risk because their assets are concentrated on mortgage related assets while banks are more diversified. However, I think this misses the point.” (Sen. Jack Reed, Subcommittee On Banking, U.S. Senate, Hearing, 7/28/05)

Sen. Debbie Stabenow (D-MI): “I don’t believe there is any need to change or disrupt the current regulatory system.” (”Allard Subcommittee Hears About Growing Debt At GSEs,” National Mortgage News, 5/14/01)